Repsol navigates between two waters in the energy transition: hydrocarbons and renewables.

Repsol navigates between two waters: hydrocarbons and renewable energies. The refining company seeks its place in the energy transition business, fighting against time, environmental organizations, and the Ministry of Ecological Transition to balance activities that provide the majority of its profits with new initiatives. With over 25,000 employees, operations in 36 countries, and 500 subsidiaries, Repsol has ventured into the electricity, gas, and renewable energy sector, serving 2.1 million customers and having a 2.8 GW capacity in renewable energies in various countries, with plans to add 1.3 GW by 2024. Five years ago, Repsol committed to achieving net zero emissions by 2050 and has developed a strategy that combines the implementation of alternatives such as hydrogen and renewable fuels with the gradual but planned reduction in the use of hydrocarbons. The company has maintained its oil exploration and production activities without growth, focusing on low-carbon activities, including wind farms, photovoltaic, hydroelectric, green hydrogen, and biofuels. Repsol will allocate 35% of its total investments, between 16,000 and 19,000 million euros, until 2027 to these areas. The company has taken significant measures, such as selling a 25% stake in the exploration and production area for 3.110 million euros, exiting the exploration and production business in Canada, and constructing an advanced biofuels plant in Cartagena, among other initiatives. Repsol's managers feel confident in their position in the energy transition and have the support of major investors like BlackRock and the Norwegian sovereign fund, who endorse the company's plans and pace of change. Internally, it is perceived that Repsol is well positioned in the energy transition, and investors have been adequately rewarded through dividends and share buybacks, leading to a 9% increase in the company's stock so far this year. The company has allocated significant sums to reward investors, combining dividends and share buybacks, and commits to a 3% annual dividend growth and a 5,400 million investment in share buybacks in the 2024-2027 period. Despite existing risks, analysts trust Repsol's execution capability and the favorable refining prices and margins environment. The company has been praised for its focus on the energy transition, although it has also received warnings about its level of debt and the need to rely on divestments to finance shareholder distributions. Additionally, Repsol faces challenges such as Iberdrola's demand for unfair competition, highlighting the rivalry between both companies in the market. In this context, Repsol continues to navigate between two waters, seeking to consolidate its new activities in renewable energies while maintaining its presence in the hydrocarbon sector. With an ambitious strategic plan and the support of key investors, the company faces a challenging but opportunity-filled future amidst the global energy transition. The struggle to balance its traditional operations with sustainable initiatives will shape Repsol's course in the coming years, in a context where the pressure to reduce emissions and promote clean energies is increasingly intense.